Sensex cracks double ton…Ends near 16k

After a breather on Friday, the Indian market resumed its up-trend on Monday, kicking off the last trading week of the year on a positive note. But, trading volumes were light due to year-end Christmas holidays. Both the main stock indices closed near session highs. Another encouraging aspect of today’s trade was that the breadth held up pretty well. The Sensex came within a hair’s breadth of 16,000 while the Nifty was within striking distance from 4800. Also, there was hardly any intraday choppiness that one associates with trading in the F&O expiry week. Markets opened higher and moved further up in the morning trade. The trajectory remained the same throughout the afternoon trade as well before the final flourish that lifted the indices to new day’s high.

India was among the few Asian markets opened for trading today while the rest were closed for the extended Christmas holiday. Most European markets and US markets are shut today as well. Japanese shares managed to close higher, as they resumed trading after Friday’s close. Their Chinese counterparts ended in the red. Stock indices in Taiwan and South Korea also finished lower. Markets in Asia had hardly any news to respond to, except an agreement between Japan and China to strengthen relations in the financial sector. The trading was underpinned by continued hopes of stability in the US economy amid ongoing worries about the European debt crisis.



For our markets too, it was a dull day in terms of new developments – corporate or otherwise. The war of words between the Government and Team Anna over the Lokpal Bill did not have any adverse impact on the overall sentiment. Social crusader Anna Hazare left for Mumbai on Tuesday to undertake his three-day fast. He said he is fit to fast on December 27, 28 and 29. The parliament will resume the winter session for three days to debate the New Lokpal Bill that was introduced by the Government last week. So, expect a lot of fireworks on this front in the remaining part of this week.

Coming back to the markets, The BSE Sensex ended at 15,970, up 232 points or ~1.5% over the previous close. It had earlier touched a day’s high of 15,998 and a day’s low of 15,761. It opened at 15,782.

NSE Nifty closed at 4,779, up 65 points or ~1.4% over the previous close. It earlier touched a day’s high of 4,787. It opened at a day’s low of 4,718.

Market breadth was favourable as the broader market too participated in the advance.

The BSE Small-Cap index and the BSE Mid-Cap index were up ~1% and 0.8%, respectively.

All the sectoral indices on the BSE were in the positive terrain. Teck and IT indices were the top winners, up over 2% apiece. Realty, Metals, Capital Goods, Consumer Durables, Oil & Gas and Power indices were up 1% to 1.5%. Auto, Banking, FMCG and PSU indices were trading modestly higher. The BSE Pharma index finished just in the red.

The call money rates hit three-year highs on Friday, fueling expectations that the RBI will cut the cash reserve requirement (CRR) for the first time since 2009.

The rate at which banks lend overnight to one another jumped 428 basis points this year to 9.78% on Dec. 23, up 128 bps above the central bank’s benchmark repo rate. That is the widest premium since March.

Banks' borrowing through the LAF repo window surged to an unprecedented Rs 1.73 trillion on Dec. 23, the RBI data showed.

Three-month commercial paper yields for top-rated borrowers jumped 35 bps this month to 10.20% today, the highest level since June.

The RBI is expected to slash the CRR by up to 50 bps next month.

The RBI left the benchmark repo rate unchanged at 8.5% on Dec. 16, after raising it by a total 375 bps since the start of 2010 to check spiraling inflation.

Reliance Industries Ltd. (RIL) shares rose today, paring this year’s decline to 28%. The Government may tomorrow approve the company’s US$1.5bn investment plan for developing four satellite fields in the KG-D6 block, according to reports.

Shares of telecom service providers - Bharti Airtel and Idea Cellular rose after the TDSAT restraint the DoT from canceling the inter-circle 3G roaming agreements between the mobile operators.

On Friday, the Telecom Ministry had told the carriers they would not be allowed to offer 3G services beyond the zones where they have their own radio airwaves.

Shares of GVK Power & Infra jumped after a business daily reported that Singapore's Changhi Airport was likely to buy a 26% stake in GVK’s airports business for up to Rs. 22bn. GVK Power however denied any such development.

Shares of Kingfisher Airlines gained initially amid reports that the company had received Rs. 7.5bn in loans from the Sahara group. The company denied the news. It ended nearly flat.

Zuari Industries' shares advanced after reports that it was buying into a rock phosphate mine in Latin America through a new joint venture with Japan's Mitsubishi to ensure assured supply of raw material for making di-ammonium phosphate (DAP).

RCOM shares advanced after a national daily reported that the company was in the final stages of talks with private equity firms Carlyle and Blackstone to sell its tower unit.

Thin trading often leads to exaggerated intraday gyrations. So, one must remain careful and cautious in the next few days. Volatility in the Indian markets may pick up over the next 3-4 sessions due to the F&O expiry on Thursday.

Friday will also be an important day as the Government will release the latest data on current account gap and fiscal deficit. Both the reports will be out after the markets' close. Barring a few reports from the US not much economic statistics are due from the overseas markets this week.

Markets globally seem to be at ease and peace with a minor year-end bounce. US economic reports over the past few days have been encouraging, underpinning the feel-good cheer across global markets. Wall Street continued its gradual advance on Friday as well. European indices also ended up on Friday. Trading volumes have been light lately as many market participants take an extended year-end break. The trend may continue to be positive in India if the rally in the overseas markets sustains.

So far, the Nifty has been honoring lower tops and lower bottom sequence. Further confirmation of intermediate trend reversal would come if it closes above 4840. The near-term outlook remains neutral with broader trading range between 4650 and 4850.

The Lokpal logjam will certainly grab markets’ attention this week. The Parliament will also hold a three-day session to debate the New Lokpal Bill. Whether the Congress party manages to muster enough numbers in the House only time will tell. The New Companies Bill and the Pension Bill have already fallen prey to resistance from allies and Opposition.

Corporate earnings and the RBI policy meet are the key events next month. February is a big month with seven-phase election scheduled in Uttar Pradesh. The Union Budget may be deferred to March, according to media reports. There is no official confirmation of the same from the Finance Ministry as yet.

Sugar stocks slipped on reports that the poll schedule in Uttar Pradesh and four other states may delay the Government's approval for further sugar exports. Bajaj Hindusthan lost 1.5% to end at Rs. 25.65, Balrampur Chini Mills fell 5.5% to close at Rs.36.25 while Shree Renuka Sugars was down 1% at Rs.25.9.

After rising to Rs. 5.79, Asian Electronics ended flat at Rs. 5.57. The company is considering forming a debt-restructuring package.

NTPC rose 1.3% to finish at Rs. 160.60 on news that the Sipat Super Thermal Power Project's unit-2 of 660 megawatts was commissioned on Dec 24, 2011.

Havells India rose 3.5% and closed at Rs 397.95 after the company announced that it was forming a 50:50 joint venture with China-based Shanghai Yaming Lighting Co., which would concentrate on energy efficient and green lighting solutions.